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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Chuck Rubin who wrote (6716)	7/11/1999 11:14:00 PM
From: Carl R.	Read Replies (2) \| Respond to of 15132

Chuck, I should have added one thing to my post, and that is that the internet is a complex area, and that different parts of it are in different phases. For example I would guess that ISP market penetration in the US is certainly high enough for growth to slow down, which could lead to a shakeout. Other areas such as video on the web are still in a very immature innovation stage, trying to find a useful niche. Somewhere in between are the e-tailers. My personal opinion is that when the group shakes out the first time, the whole sector will shake together, and that the cause could be price wars among ISPs who are no longer growing rapidly. An example of a trigger could be if AOL, PSI, and Mindspring start losing market share to broadband alternatives such as DSL and cable, leaving them with excess capacity and declining profits. Since the e-tailers will still be unprofitable or marginally profitable, they'd shake, too, as will the rest. The internet will not be a safe place to invest, in my opinion, until the current investors have been so badly burned that they learn that all is not gold, and they learn fear. Today any IPO you buy is profitable regardless of the company, the principals, or the concept, and that is an historical aberration. Once current internet-company investors have been really burned, then and only then will the valuations reach sustainable levels that will grow with the continued growth of the winning companies. Until then, the winners and losers alike will be overvalued and dangerous. In my opinion some 80% of todays internet IPOs will be gone in 10 years. If and when a big shakeout comes, it will not be the end of the bull market. The tech sector will follow it down, of course, but then the bull market will be re-invigorated in the process because the overall economy will continue to be strong for years to come. At some point, profitability will become a cornerstone of internet investing, and PE ratio will rule valuations. Until that time long term holdings of the internet stocks may well best be left to Raven and subscribers of Monkey.com. <G> Carl

To: Chuck Rubin who wrote (6716)	7/12/1999 12:32:00 AM
From: Hank Stamper	Read Replies (1) \| Respond to of 15132

"The trouble is Bob, IMO, doesn't seem to understand that these internet stocks are not quantifiable like your IBM's Microsofts, GM's what have you..." I would like to disagree. I think BB does understand. However, I am not BB, so I'll offer my take: The IBMs etc. are quantifiable in terms of a) fundamentals, b) value, and c) momentum. The internet stocks are also quantifiable in these terms. Trouble is, they have never added up to anything on "a" and "b." And, now "c" stands for crumble as the failure to add up in "a" and "b" would have predicted. The market has never in history--never--allowed a group of stocks with no earnings to rise over time. The market, barring temporary manic-enchantments, has always corrected such hopeful monsters. The lesson here is no different from any other mania-lesson: bubbles pop. But, then again, what do I know? Ciao, David Todtman

To: Chuck Rubin who wrote (6716)	7/12/1999 12:45:00 AM
From: Math Junkie	Read Replies (1) \| Respond to of 15132

<<Bob did it again today, and yesterday, and a couple of weeks ago and the week before that....everytime he is on the show it seems he is absolutely obsessed with talking about how overvalued the internets are...>> You may calling it being obsessed, but I call it doing his job, part of which is to make sure his listeners understand the concept of risk, and what is a risky investment and what is less so. Too many unsophisticated investors have lost too much money in the latest high-risk, high-flying sector. Bob's dwelling on the subject is made necessary by the incredible enthusiasm, or to use Dr. G's turn of phrase, "irrational exuberance" that people have for Internet stocks. The mere fact that there is even one person out there who has something like 40% of their portfolio in an AOL, for example, is justification enough for the point to be pounded home week after week that, "Hey, folks, these stocks are risky. In fact, these stocks are so risky that in some ways they are more like gambling than investing!" Take a look at this list that don lane provided, of the highs for some of these stocks, and then check the current prices for them: beta.siliconinvestor.com Some of the people who listened to the "price doesn't matter" crowd have lost 80% of their money, and I sure that some who were on margin were just wiped out. These are real people, who have lost real money, and I, for one can forgive Bob's sounding like a broken record if he can keep a few more investors from becoming "the greater fool". <<...these internet stocks are not quantifiable...>> Now there's a ringing endorsement for an investment if I ever heard one ... NOT!